Michel and Kappos sign onto letter signalling their support for DOJ’s new focus on patents and antitrust
13Feb18

A high-profile group of academics and senior IP stakeholders - including former Chief Judge of the Court of Appeals for the Federal Circuit Paul Michel and former USPTO Director David Kappos - have written to Department of Justice antitrust head Makan Delrahim to voice their support for what they characterise as his commitment to apply antitrust law equally to both those who develop patented technology and those who implement standards-based technology.

The group also criticises a letter sent to Delrahim late last month from a collection of mostly tech companies - including Cisco, Dell, Intel, Microsoft and Samsung - which expressed concern over parts of a speech given by America’s antitrust czar in November last year.

The duelling letters spell out what has become a familiar divide in the world of standard essential patents between those companies — typically cast as the implementers — who rail against what they see as the perceived threat of patent hold-up, and those companies and senior IP figures who claim there is little evidence to support those concerns and that, essentially, implementers are focused on paying less for SEP licences.

The academics claim that the concern expressed by the group of implementers in their earlier letter that hold-up is a problem rests entirely on “questionable models that predict that opportunistic behaviour in patent licensing transactions will result in higher consumer prices”. That claim, the academics insist, is not borne out by market reality.

The letter goes onto stress that: “No empirical study has demonstrated that a patent owner’s request for injunctive relief after a finding of a defendant’s infringement of its property rights has ever resulted either in consumer harm or in slowing down the pace of technological innovation.”

Both letters reflect the heightened fight taking place over antitrust and IP policy in the Trump administration. There’s no doubt that the Obama White House, particularly during its second term, was largely sympathetic to the concerns of the implementer community and threw its support behind initiatives such as the controversial revision of the IEEE’s patent policy. That policy has been sharply criticised by some patent owners, such as Qualcomm, Ericsson and Nokia. which have refused to license under it, and it now appears to be in the DOJ’s crosshairs.

Since Delrahim was confirmed in September there have been a number of indications that the current administration is focused on ensuring that there is greater balance between the interests of SEP owners and implementers. In his November speech at the University of Southern California, Delrahim told the audience: “I worry that we as enforcers have strayed too far in the direction of accommodating the concerns of technology implementers who participate in standard setting bodies, and perhaps risk undermining incentives for IP creators.” In an exclusive for this blog, Kappos claimed that Delrahim’s comments marked the “start of a new era of DOJ policy”.

Most recently a member of Delrahim’s team, Andrew Finch, told a DC conference that the DOJ was actively looking at what could be cartel-like behaviour on both sides of the divide between implementers and SEP owners. “In particular we have been looking at the rules of standard setting organisations that purport to clarify the meaning of reasonable and nondiscriminatory and that may instead serve to skew the bargaining clearly in the direction of one party or the other,” he commented.

The DOJ’s stance has perhaps not surprisingly caused some alarm among the implementer community. In their January letter, the companies expressed their concern that “the policy approaches announced in [Delrahim’s] USC speech may undermine fundamental patent licensing obligations that our companies and our customers rely upon”.

In highlighting their concerns around the problems of patent hold-up the companies insisted that: “We fully support a patent holder’s right to reasonable compensation based on the value of patented technology from those who infringe. We disagree however, with the statement made in the USC speech that US courts provide “no recourse” to SEP holders that seek fair compensation for infringement of their patented inventions.”

As we wait for a complete picture of what patent policy might look like under the Trump administration, if the fight unfolding over IP and antitrust is any indication, the early signs are that it’s going to look very different than under Obama. With Andrei Iancu now in place at the USPTO, we are likely to learn a lot more over the coming months.

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